Suppose a decrease of 7% in the price of lobster increases the consumption of lobster by 18%. Such a price decrease will induce households to spend
A. less on products that are complementary with lobster.
B. more of their income on lobster.
C. the same amount on lobster as before.
D. less of their income on lobster.
Answer: B
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The supply of product X is elastic if
A. an 8% increase in price generates an 8% increase in quantity supplied. B. a 10% decrease in price does not affect quantity supplied. C. a 5% increase in price generates a 7% increase in quantity supplied. D. a 7% decrease in price generates a 5% decrease in quantity supplied.
The believer in policy ________ must be pessimistic about the ability of the private economy to self-stabilize and ________ about the accuracy of economic forecasting
A) activism, pessimistic B) activism, optimistic C) rules, pessimistic D) rules, optimistic
Consider a theory of discrimination based on the assumption that white employees dislike associating with black employees. Such a theory would predict that
a. blacks will be paid a lower wage than whites. b. the workforce will be heavily segregated. c. white workers will have better capital than black workers. d. black unemployment will be higher than white unemployment.
Capital is best considered as:
A) the natural environment. B) a factor of production that has been produced. C) financial assets. D) money.